Klarna (KLAR) reported a stronger-than-expected second quarter, but investors focused on a significantly weaker outlook for the rest of the year, sending shares down nearly 21% in premarket trading on Tuesday. The stock has now fallen more than 31% year-to-date.
The Swedish buy now, pay later company posted a net profit of $9 million for the April–June period, its first quarterly profit on the bottom line, compared with a loss of $53 million a year earlier. Analysts had expected a net loss of $17.4 million. Revenue rose 27% year over year to $1.04 billion, beating the $993.8 million consensus estimate. Adjusted operating income more than tripled to $91 million from $29 million.
Despite the earnings beat, the company's guidance for the third quarter and full year raised concerns. Klarna expects Q3 revenue of $940 million to $980 million, with the midpoint of $960 million well below the $1.1 billion consensus compiled by Visible Alpha. Adjusted operating income guidance of $5 million to $15 million (midpoint $10 million) also fell far short of the $85.2 million consensus. Gross merchandise volume (GMV) is expected at $35 billion to $36 billion, versus the $39 billion analyst estimate.
The guidance points to a sharp sequential slowdown, suggesting a more difficult second half than investors had anticipated. Morgan Stanley had raised its price target to $21 from $18 while retaining an Equal Weight rating ahead of the results, but the cautious stance offered little support after the company lowered its forecasts. Options markets had implied a roughly 15% move around the earnings release; Klarna has exceeded that range in each of its previous two earnings announcements, with the stock falling more than expected both times.
Currency and Germany weigh on 2026 outlook
Klarna also reduced its full-year revenue forecast to $4.1 billion–$4.2 billion, with the midpoint of $4.1 billion well below the $4.4 billion consensus. The company cited approximately $600 million in currency translation headwinds and a more cautious view of volumes in Germany, its largest market by volume. As a result, it cut its full-year GMV forecast to $149 billion–$151 billion, down from its previous expectation of more than $155 billion.
The downgrade highlights the challenge Klarna faces in balancing rapid growth in the US with softer trends in some of its more established markets. The US business remained a bright spot: total GMV rose 18% year over year to $36.6 billion, while US GMV increased 27%. Transaction margin dollars—a key metric management uses to measure business economics—grew 42% to $446 million, representing 42.8% of revenue. The company raised its full-year transaction margin dollar guidance to $1.6 billion–$1.7 billion (approximately 1.09% of GMV), up from its previous expectation of more than 1.04%. Full-year adjusted operating income guidance remained largely unchanged at $280 million–$300 million.
CEO and co-founder Sebastian Siemiatkowski said: "Over 120 million consumers now use Klarna, and each is using it for more of their everyday spend—revenue per active consumer grew 24%. That deepening engagement is why transaction margin dollars grew 42%, well ahead of revenue and volume."
Investors had expected more
Klarna's shares had shown some signs of recovery before Tuesday's sell-off, closing at $19.51 on Monday after gaining about 4% over the previous month. Analysts had become more optimistic, with Goldman Sachs, UBS, and JPMorgan raising price targets to $25, $23, and $22, respectively, in recent weeks. But the lower guidance has put that optimism under pressure.
Klarna made its Wall Street debut in 2025 at a valuation of roughly $15 billion, joining a wave of technology and fintech listings. Since then, investors have had to assess whether the company can convert its expanding customer and merchant base into consistently stronger profits. The merchant base grew 54% year over year to more than 1.2 million.
The company is also preparing for leadership changes: CFO Niclas Neglén and CMO David Sandström are expected to transition out of their current roles in early 2027 after six and nine years, respectively. Klarna has begun searching for a New York-based CFO, while Neglén will continue leading the finance organization and investor engagement through the transition.
For context on the broader fintech landscape, see our coverage of Nu Holdings' record margins and On Holding's growth outlook trim.
This article is for informational purposes only and does not constitute financial advice.
